Air France KLM Cargo gets digital to smooth processes

The last few years have by no means been easy for Air France KLM Martinair Cargo (AF KLM) as it underwent a restructuring that saw it lose around 15% of staff over a three-year period.
Its freighter fleet was also reduced from 15 aircraft at the start of 2014 to six today.
However, Marcel de Nooijer, head of the Franco-Dutch carrier group’s cargo business, points out that the airline also made several investments during this period.
These include its new Hub Express centre in Paris Charles de Gaulle in 2015, a new sorting system at Schiphol that can handle post, express and pharma shipments, several IT development projects, new products and it enhanced cargo partnerships.
Investment in IT
Its most recent investment comes in the shape of IT. In March, AF KLM implemented the Accenture Freight and Logistics Software platform throughout its network.
The solution integrates booking, offer, pricing, rating, capacity and revenue management, flight planning and air waybill control functions through a single platform.
De Nooijer says: “We have started to invest seriously in phasing out legacy IT systems. We will soon go into a second phase where we change our operational systems and that will be an even larger investment.
“You cannot only go around with a model of destruction, because it will affect the team’s morale and exposure to the market. It needs to be combined with a model of construction to continue your business.
“You should also construct your business and that is what we are doing with this clear drive into digitisation, process efficiency, better hardware and new product offers.”
De Nooijer says that staff previously had to deal with a variety of systems but now this is all in a single system.
“We now have one truth that involves inventory, it involves pricing, it all comes together and places the decision power in the hands of one person.
“It enhances better decision making, it enhances better optimisation, it enhances speed and it enhances better opportunity finding towards the customer.”
Another benefit to the system is that it allows AF KLM to continue its push into dynamic pricing, where rates change automatically based on space available and customer requirements, in a similar way to prices changing when booking an Uber taxi.
“Pricing is the ultimate communication — it is the need of a customer translated into the capacity of the company and the message across is the pricing element,” says de Nooijer.
“If you can fine tune that to the actual needs of the customer, you have a perfect match, it’s not too high, it’s not too low, it’s the match that gets you the business.”
AF KLM’s digital drive will also help the company to better target the small and medium (SME) forwarder segment.
This customer base is notoriously difficult to get a grasp on because each has their own requirements, making the cost of serving them more expensive than larger customers.
“Technology now gives you the opportunity to serve them properly and on a one-to-one basis,” says de Nooijer.
Easy-to-connect services
“I’m not a believer in a fully automated world, but I think the straightforward stuff can be handled in a transactional way and that then frees up time for sales staff to focus on cases that require a real intellect, a real feeling of what the customer wants.”
The airline has also launched What Counts, a product aimed at SME customers that bundles together 24/7 easy-to-connect services, tailor-made offers, and a loyalty programme.
This allows the airline to approach every customer in a unique way, based on their particular needs, by sending them specific offers and information appropriate to their level of specialisation.
Another area of focus for the airline is the continued development of partnerships, like the ones it has developed with China Southern Cargo and Delta Cargo.
With Delta Cargo, the two airlines have integrated their sales operations in Europe and continue to roll out a ‘one-roof’ strategy where they share warehouse space. In March, Seattle became the latest location where they shared facilities.
Looking forward, de Nooijer says that he would like to see a cargo partnership with Jet Airways, following on from the signing of a deal on the passenger side of the business on the India-Europe market announced in November.

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